Semiconductor Manufacturing International (981) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 revenue reached $1,901 million, up 8.6% sequentially and 21.8% year-over-year, with gross margin at 13.9% and profit attributable to the company at $165 million.

• First half 2024 revenue was $3,651.5 million, up 20.8% year-over-year, but profit attributable to owners fell 62.7% to $236.4 million due to product mix changes, higher depreciation, and lower investment and net interest income.

• Gross margin declined to 13.8% from 20.6% year-over-year, and EBITDA margin decreased to 53.2% from 71.2% year-over-year.

• No interim dividend was declared for the period.

• Utilization rate increased to 85% as demand for mid and low end consumer electronics recovered and supply chain disruptions created incremental demand.

Financial highlights

• Second quarter EBITDA was $1,056 million with an EBITDA margin of 55.5%.

• First half EBITDA was $1,943 million with an EBITDA margin of 53.2%.

• Second quarter profit from operations was $87 million; first half profit from operations was $90 million.

• Net cash generated from operating activities in the first half was $489.3 million, down 69.4% year-over-year.

• Capital expenditure focused on capacity expansion, with $4.27 billion spent on property, plant, and equipment in the first half.

Outlook and guidance

• Third quarter 2024 revenue expected to grow 13%-15% sequentially; gross margin expected at 18%-20%.

• Blended ASP expected to increase sequentially in Q3, driven by tight capacity and higher value-added 12-inch nodes.

• Annual revenue growth is targeted to exceed the industry average, with second half revenue expected to surpass the first half.

• Management expects continued tight capacity in certain 12-inch nodes and upward price trends in the third quarter.

• Fourth quarter outlook remains cautiously optimistic with some uncertainty.